Family Values

February 01, 2005
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by Suzi Fraser Dominy

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Weston Milling New Zealand is located in three sites. It has a flour mill in Christchurch in the South Island and two on the North Island: a mill at the country’s capital city of Wellington and the main mill in the Otahuhu district of South Auckland. Along with Weston Animal Nutrition, its animal feed production facility at Rangiora, near Christchurch, Weston Milling is part of George Weston Foods (NZ) Ltd., a wholly owned subsidiary of George Weston Foods Australia, one of Australia’s largest food manufacturers, which in turn is a part of Associated British Foods plc (ABF), the U.K.–based food corporation with sales in 2004 of over £5 billion (approximately U.S.$ 9.3 billion).

"We have the best of both worlds," Greg Bourke, group general manager, Weston Milling New Zealand told World Grain. "On the one hand we have the size, flexibility and virtual autonomy in management and strategic planning of a local company, while on the other we have the identity and financial support of a large international corporation."

GRAIN SOURCING
It might be expected that group purchasing power would be leveraged for wheat buying, but this is not so. "Here’s where our independence is a major benefit," said Bourke. New Zealand produces a modest 300,000 tonnes of wheat, of which only one-third is suitable for bread making. This means that large quantities of wheat are imported, mostly from Australia, arriving by bulk or container at the nearby Port of Auckland. "Because we buy directly, the Australian Wheat Board views us as an export customer," explained Bourke, who includes wheat

procurement in his list of responsibilities. "That gives us a price advantage. Our Australian parent is subject to the domestic pricing structure, so we can sometimes buy cheaper than they can in Sydney due to currency and world wheat price movements."

Canada Western Red Spring wheat (CWRS) is used in 10% – 20% of the grist for certain customers. "They like the quality and are accustomed to its baking characteristics," says Bourke. The company also brings some local biscuit wheat up from the South Island by rail for New Zealand’s only biscuit maker Griffins.

MARKET FOR FLOUR
Weston Milling produces a full range of bread flours and bakery mixes. It specializes in bulk production for its own vertically integrated Tip Top plant bakery and for the craft bakery sector, which it also supplies with 20kg sacks of flour. Household flour sales are important to Weston Milling as well, but Bourke suspects that the numbers do not reflect the true size of the market. The country’s leading supermarket chain is the "big box," no frills Pack N Save. "5kg packs sold through Pack N Save are a large part of our retail flour trade," Bourke explained. He contends that much of this flour goes into food service. "I just don’t believe that Kiwis are such big home bakers that they buy flour in 5kg units," he said.

Weston Milling is New Zealand’s second largest miller, commanding some 35% of the country’s 270,000-tonne market for flour. The larger share — approximately 60% — is dominated by Goodman Fielder, a wholly owned subsidiary of Australia’s food giant, Burns Philp, itself majority-owned by New Zealander, Graeme Hart. The remainder is divided between a handful of independent millers. The largest, Canterbury Flour Mills at Ashburton in the South Island, is owned by and supplies River Mill Bakeries. A small amount of flour is also imported from Australia.

The flour market is growing at a rate of 5,000 tonnes per year. Demand is not evenly spread; it is all in Auckland.

There is a demographic shift taking place in New Zealand. Businesses are migrating from the South Island up to Auckland and the rapidly expanding, cosmopolitan city draws immigrants from Europe, Asia, the Pacific Islands and increasingly, from South Africa.

Weston Milling is preparing to meet increased demand with a program of modernization and expansion. It will spend NZ$10 million (approximately U.S.$7 million) across all four plants in the next 12 months, but the focus is on the Auckland site. By the end of this year every part of the Auckland operation, with the exception of wheat intake will have been redeveloped or replaced. New national offices are already in place and the milling plant is scheduled for a major upgrade this summer.

UPGRADING AND EXPANDING CAPACITY
National Operations Manager, Tim Howell is the first to agree that the Auckland mill needs modernizing. The existing Simon mill has served the company well since it was built in 1976, but even then the sifters were reconditioned.

When Howell joined Weston Milling in 2003 the decision to replace the sifters had already been made. "Replacement sifters from Sugden’s Mill in Brighouse, U.K. were originally shipped out then," Howell said but he noted that there would be no increase in capacity and no additional return on investment. There was no additional budget either.

It is at this point that good timing and the Weston ‘family’ connection changed the improvement plans and greatly expanded the scope of the project.

When George Weston, ABF’s newly appointed chief executive made one of his regular visits to Weston Milling New Zealand in 2003, a meeting between Bourke, Howell and the new CEO resulted in a neat solution. In 2001 Allied Mills, then the U.K. milling division of ABF, had closed the relatively new William King Mill in Uxbridge, U.K. The Golfetto mill had been installed just seven years earlier, and the complete roll floor was even newer. For technical reasons this had been replaced in 1999. The machinery had been mothballed and was slated to be sold.

Following a simple transfer of assets, Weston Milling is now on course for an all-new Auckland mill.

"We are replacing the entire milling plant with modern equipment for less than the cost of the roll floor alone," Bourke said. "In a tough, very cost driven and competitive market we have a truly cost-effective solution that will meet our technology and capacity needs for the next 20 years."

"We really couldn’t do this without the resources from Australia. Weston Cereal Industries Divisional CEO Peter Faddy has given this project full support so all design, engineering and commissioning work will be in-house." The plans have all been completed and the refit is slated for June or July 2005.

The major hurdle to the transfer is that the roller mills are of drop-through design rather than the direct pick-up of their existing roller mills. "We were able to design the conversion easily enough, but the power demand on the pneumatic system was excessive because of the extra height," Howell explained. "We have had to rework all of the pneumatics from the original design."

The solutions do not stop there. Much
of the Auckland equipment is still very serviceable and is earmarked for the Wellington plant. "Wellington is a satellite production site, very much a least-cost operation where the objective is to produce quality bulk flour at the lowest unit price," Howell said. The equipment from the Auckland mill will modernize the plant, which is still running with Thomas Robinson roller mills from the 1950s.

UNINTERRUPTED CUSTOMER SERVICE
The biggest concern however is to ensure that there is no impact on customers during the six-week shut down and demolition period. The Auckland plant is already running at full capacity so the plan is to build up stock from the Wellington mill, which is running five days a week. "We can store 2,000 tonnes of flour in bags and our Wellington plant will send up five or six bulk flour tankers a day," Bourke said. "We also have some spare capacity in Christchurch that we can tap," he added.

Transporting the flour will be an added cost, but grain can be delivered either to Auckland or Wellington. "My biggest fear is that it will snow and we will have road closures," Bourke said, only half joking, "but as an absolute last resort we can always bring in flour from Australia."

STAFFING ISSUES
Cost efficiencies allow for investment in the latest in control systems. "We are working on something very special," Howell told World Grain. "This will be the most advanced control system in any mill in Australasia, let alone New Zealand."

Bourke insists that this is not an uncharacteristic break from the economical approach taken to the rest of the project. "This is not extravagance," he said, "there is a very good business reason behind it."

"We are the only flour mill in Auckland," he explained. "It is very difficult to find trained staff as there is no pool of experience in flour milling."

"Our plan for the future is to need fewer people — but those we have will be highly skilled."

The control system will achieve the first objective and the second has triggered an international recruitment drive and an ambitious training program.

Weston Milling employs around 90 people: 45 at the Auckland headquarters mill and offices and about 15 at each of the flour mills and feed mill. A quick glance around the company shows an ethnically and nationally diverse group of people: Bourke is from Australia, Howell from the U.K. Other key staff are from Poland, Pakistan, the Netherlands, Switzerland, South Africa, Fiji, Taiwan – and the list goes on.

Clearly importing skills is a considerable investment and Howell insists that in the long term interests of not just Weston Milling but flour milling in New Zealand, local skill must be developed. As a first step a Cadet Program, based loosely on an apprenticeship style learning, has been started and Howell has also started moving millers around between the different locations. "Because people only had experience of one mill, they only knew how to fix problems specific to that plant," he said.

The next step was to introduce compulsory distance learning courses. "All millers must complete the seven modules of the NABIM City & Guilds flour milling course within five years," he said.

"These are run through the Flour Millers Council of Australia and are a big help but are not ideal since the City & Guilds correspondence course is U.K.-based and does not address some of our local situations."

Howell says he is planning to introduce craft-based training programs and is hoping to start an annual award to send the recipient to the Swiss Milling School short course in Switzerland.

Not one to shrink from big ideas, Howell also talked about the possibility of building a training mill from some of the old equipment to give New Zealand and Australian millers somewhere to gain hands-on practice.

"HR is a big issue," Bourke emphasized. "Succession and forward planning is critical." In the current environment, the tendency is to have more people than you need because you have to have the back-up, and that is not cost efficient. However, the problem is that if one of our millers leaves the question is literally "How are we going to make flour next week? It’s a very fine balance."

Greg Bourke has a lot going on: a complete overhaul of his plant and the reshaping of his working force, but he is confident. "If you are going to have a flour mill in New Zealand, you want it in Auckland. And if you have it in Auckland you want it in South Auckland and you want it on a large parcel of land where you can expand. We have all that plus a modern mill with increased capacity and the most advanced control system in the Southern Hemisphere to look forward to — and all for a modest budget." What’s not to smile about? WG